Deutsche in $1bn WMC raid

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Deutsche Bank last night launched a $1 billion raid on WMC
Resources - the long-awaited move by a new bidder for the company
seems to have begun.

From about 7pm onwards Deutsche Bank dealers in Sydney and
Melbourne were ringing fund managers around the world - waking some
up in New York - and bidding $7.85 a share for up to 120 million
shares or 10.1 per cent of the company, 65c above the price bid by
the Swiss group Xstrata.

The dealers told fund managers it was "all or nothing" - that
unless they got the 10.1 per cent, Deutsche would not buy any stock
at all.

Many fund managers are understood to have offered to sell 10 per
cent of their stake to Deutsche. It was generally believed among
the fund managers that the stake would become a launching pad for a
bid for WMC from either Rio Tinto or BHP Billiton, although this
could not be confirmed last night.

WMC has known of this stake for some time and has been peppering
the investment bank with Section 672 notices - legal requests for
the beneficial ownership of the shares.

Deutsche has consistently said that it beneficially owns the
shares itself, and the Australian Securities and Investments
Commission is understood to have confirmed this to WMC.

Whether it is indeed Rio or BHP preparing to bid, or simply an
aggressive play by a hedge fund to block Xstrata's ambitions and
force the price up, Deutsche's actions last night will dramatically
change the course of what had seemed Xstrata's inevitable
victory.

WMC shares are likely to open sharply higher this morning -
probably above $8 a share.

Deutsche's head of investment banking, Hamish Douglas, refused
to comment on his firm's off-market bidding last night.

Xstrata's spokesman in London, Marc Gonsalves, said he had heard
about the Deutsche "book-build" in Australia but had no idea who
was behind it or what was intended.

A BHP Billiton representative declined to comment, and Rio Tinto
could not be contacted.

WMC managing director Andrew Michelmore said last night he did
not know who Deutsche Bank was acting for.

WMC shares last traded at $7.46, having drifted from a peak of
$7.82 on February 21, four days after Xstrata extended the offer
period to March 24.

Xstrata had raised its bid from $6.35 to $7.20 on February 2 and
declared the offer free of all conditions last week.

Several international mining companies are understood to have
completed confidential due diligence on WMC since Xstrata first
launched its offer, and have also sent teams to inspect the Olympic
Dam mine and processing plant in South Australia.